Another major concern, says Nomura, is India’s ongoing reliance on China for raw materials and components used in electronics like iPhones, limiting Delhi’s ability to fully capitalise on supply chain shifts.
“India’s earnings from making iPhones will only rise if more of the phone is made locally,” Mr Srivastava told the BBC.
According to him, right now Apple earns over $450 per iPhone sold in the US while India keeps less than $25 – even though the full $1,000 is counted as an Indian export.
“Just assembling more iPhones in India won’t help much unless Apple and its suppliers also start making components and doing high-value work here. Without that, India’s share stays small, and the export numbers go up only on paper -possibly triggering more scrutiny from the US without real economic gain for India,” Mr Srivastava said.
The jobs created by such assembly lines aren’t very high quality either, says GTRI.
Quite unlike companies like Nokia which set up a factory in the southern city of Chennai in 2007 where suppliers moved in together, “today’s smartphone makers mostly import parts and push for lower tariffs instead of building supply chains in India”, explained Mr Srivastava. He noted that, in certain instances, the investment made could be lower than the subsidies received under India’s PLI scheme.
Finally there are concerns that Chinese exporters could try to use India to reroute products to the US.
India doesn’t seem averse to this idea despite the pitfalls. The country’s top economic adviser said last year that the country should attract more Chinese businesses to set-up export oriented factories and boost its manufacturing industry – a tacit admission that its own industrial policy hadn’t delivered.
But experts caution, this could further curtail India’s ability to build local know-how and grow its own industrial base.
All of this shows that beyond the headline-grabbing announcements by the likes of Apple, India is still a long way from realising its factory ambitions.
“Slash production costs, fix logistics, and build regulatory certainty,” Mr Srivastava urged policymakers in a social media post.
“Let’s be clear. This US-China reset is damage control, not a long-term solution. India must play the long game, or risk getting side-lined.”
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